Offer reciprocal zero duty for smartphones in BTA negotiations with US

The Indian electronics sector is poised to capitalize on a significant opportunity as the government engages in bilateral trade agreement (BTA) negotiations with the US. The aim is to boost exports in key sectors such as mobile devices, air-conditioners, colour TVs, wearables, and audio, which China, Vietnam, and Mexico currently dominate.

Pankaj Mohindro, Chairman, ICEA suggested that India could offer reciprocal zero duty on smartphones.

Major imports from the world
(in USD billion)

Smartphones, primarily driven by Apple Inc., are India’s leading electronics export to the US. Despite this, India’s share of US smartphone imports was 8.3% in 2023, compared to Vietnam’s and China’s larger shares. The US imported smartphones worth $60 billion that year, with China dominating the market at 75%.

Pankaj Mohindro, Chairman, India Cellular and Electronics Association (ICEA), has suggested that India could offer reciprocal zero duty on smartphones.

Expressing strong optimism regarding the potential for a well-structured Bilateral Trade Agreement (BTA) between India and the US, Mohindroo said that, “a BTA could offer reciprocal zero-duty treatment for key electronics products, including smartphones, hearables and wearables, colour televisions, consumer electronics and appliances, and lighting. Such an agreement would not be an extraordinary step, given that India already extends similar treatment to Free Trade Agreements (FTAs) with countries like Japan, Korea, and ASEAN nations (Vietnam, Thailand, Indonesia, etc.)”

India could benefit from the recent imposition of a 20% duty on smartphones from the US (Indian tariff is 16.5 per cent) and a 25% duty on Mexico, which was previously under a free trade agreement. If it reduces or eliminates its tariffs on these products, India will have opportunities in other electronics segments, such as colour TVs and air conditioners. However, China remains dominant in laptops, tablets, wearables, and hearables.

The long-term impact of a cautious optimistic outlook is the ballooning of electronics exports from India to the US from USD 10 billion to USD 80 billion, an 800% growth by 2030.

CT Bureau